American companies poised to boost capital spending

Chevron, the world’s fourth-largest energy company by market value, said on Dec. 5 it plans to spend $36.7 billion on capital investments including exploration, up from $32.7 billion this year. “We’re investing in a portfolio of very attractive oil and gas projects that will deliver volume growth,” Chairman and Chief Executive Officer John Watson said.

Expansion by energy and materials companies reflects tight supply and a recovery in housing markets, said Market Securities-Kyte Group’s Barraud.

“Investment should grow in the mining sector with capacity at more than 90 percent and because the consumption of basic materials will be stimulated by the recovery of the residential real-estate market,” he said.

Credit Availability

Banks have increased commercial and industrial loans at an annual rate of 12 percent the past two quarters, according to Fed data. Lenders have eased standards during the past three quarters, the central bank’s senior loan officer surveys showed.

There’s “an important role for credit availability in explaining investment decisions,” said Goldman Sachs Group Inc. economists in a report Dec. 5 on “drivers of capital spending.”

Pent-up demand by businesses will be released once the nervousness lessens over the impending changes in fiscal policy, said Harm Bandholz, chief U.S. economist at UniCredit Group in New York.

“The motive for investing is still there, which is a better sales outlook,” he said.